Clause by clause analysis
Clause 1 is the Title clause.
Clause 2 provides that the Bill is to be brought into force on a day or days appointed by Order in Council. The reason for this is that the successful implementation of the changes contained in the Bill are dependent on the prior completion of administrative measures, staff training, and steps to inform landlords and tenants.
Clause 3 states that this Bill amends the Residential Tenancies Act 1986 (the principal Act).
Clause 4 amends section 2 of the principal Act, which relates to interpretation.
Cross references are made to definitions relating to boarding house tenancies that are contained in new Part 2A of the principal Act. The word dispute is given an extended meaning. The Tenancy Tribunal currently has jurisdiction to determine disputes, and a question has arisen whether this includes a power to make declarations and deal with matters that are not necessarily disputes. The new definition is intended to confirm that the Tribunal does have that wider power.
The definitions of chief executive, Minister of Housing, and Ministry of Housing are replaced with generic definitions, which follow current drafting practice and accommodate the change from the Ministry of Housing to the Department of Building and Housing.
The definition of Tenancy Officer is repealed as that position is discontinued.
The definition of member of the landlord’s family is replaced to extend its application to owners of premises. In all other respects, the definition remains unchanged.
The definition of service tenancy, which basically covers tenancies linked to employment agreements, is replaced to cover tenancies linked to contracts for services.
The definition of facilities is amended to clarify that facilities are shared with others and that the definition does not apply to boarding house tenancy agreements.
Clause 5 substitutes a new section 4 in the principal Act. This is a consequential amendment. At present, the section says that the principal Act applies except as otherwise provided in
“this Part”, but with the inclusion of new Part 2A the exception needs to be expanded.
Clause 6 amends section 5 of the principal Act, which is the section that defines which sorts of residential tenancies are not covered by the Act. The current exclusion of tenancies with a substantial service component is repealed. Further, as certain kinds of boarding house tenancies are now brought under its ambit, the provisions of section 5 that had the effect of excluding those tenancies need to be amended. The current exclusion of premises used principally as a residence by the landlord or the landlord’s family is extended to cover the owner or the owner’s family. Section 5 is also amended to specify with greater precision, the kinds of accommodation for school pupils and tertiary students that are exempted from the Act. School hostels (within the meaning of section 2 of the Education Act 1989) are exempt. Also exempt are premises in which accommodation is provided to students enrolled at tertiary institutions if the requirements of new section 5B are complied with. A further exemption is provided for premises that are let so that the tenant can use them to provide social housing.
Clause 7 inserts new section 5B, which sets out the requirements to be met by tertiary student accommodation that is exempt from the Act. The premises must be used exclusively to accommodate tertiary students. They must be owned or operated by a tertiary education provider or a person who has a written agreement with the relevant tertiary education providers. Such an agreement must set out the respective rights and obligations of the parties and provide for a dispute resolution process. The services provided to the students must be over and above the services required under the Act. There is also a requirement for house rules that meet specified criteria, which have to be accessible to prospective and current student tenants.
Clause 8 amends section 7 of the principal Act, which exempts fixed-term tenancies of not more than 120 days from certain provisions of the principal Act. The clause reduces that period of 120 days to 90 days and also provides that the parties may not enter into such short fixed-term tenancies in order to provide a trial period for testing the suitability of the parties. Where this prohibition is breached, the Tribunal may order the extension or renewal of that tenancy on any terms the Tribunal thinks just, as long as uninvolved third parties are not prejudiced by the order.
Clause 9 inserts new section 13AB into the principal Act, which sets out the requirements for addresses for service, that is addresses at which service of notices and documents will be accepted. A party must give a physical address as the party’s address for service. In addition, such addresses may also take the form of Post Office box numbers, email addresses, and facsimile numbers. The clause consequentially repeals sections 13A(2), 15(2), and 16(2), which all provide that a Post Office box number is not a sufficient address for service.
Clause 10 makes a consequential amendment to section 13D of the principal Act to include a cross reference to a new provision in new Part 2A.
Clause 11 amends section 16, which requires changes of name or address to be notified. The amendment clarifies that the obligation does not apply to a contact person whose name and contact details are contained in a boarding house tenancy agreement.
Clause 12 inserts new sections 16A and 16B. New section 16A requires landlords who are absent from New Zealand for longer than 21 days to appoint an agent and to notify the tenant of the agent’s name, contact address, and address for service. If a bond is held in respect of the tenancy, the chief executive must be notified of those particulars in the prescribed form. An agent appointed under this section has, vis-à-vis the tenant, all the rights and obligations of the landlord.
New section 16B concerns units under the Unit Titles Act 1972. If such a unit is let, the tenancy agreement must set out the body corporate rules that will affect the tenant. Those rules form part of the tenancy. Any variation of the rules must be promptly notified to the tenant, and varies the tenancy as soon as it is notified.
Clause 13 amends section 17 of the principal Act to prohibit landlords and real estate agents from requiring tenants to pay solicitors or real estate agents for services rendered in respect of the tenancy. An exception is made in the case of reasonable expenses or commissions incurred in recovering payments owed under orders of the Tenancy Tribunal, if the tenancy agreement provides for that.
Clause 14 inserts a prohibition into the principal Act against charging a tenant a fee for the grant or assignment of a tenancy. Fees of that kind are often referred to as a letting fee.
Clause 15 inserts new section 18A, which prohibits landlords from requiring tenants to provide landlords with a security that is not either a bond permitted by the principal Act or a guarantee. It is made clear that the provision of security includes means by which landlords are given access to the accounts of tenants, such as the imprints of credit cards or PIN numbers of credit cards or charge cards. Requiring a tenant to provide security (other than a permitted bond or guarantee) is declared to be an unlawful act and thus enables the Tribunal to award exemplary damages to the tenant.
Clause 16 consequentially amends section 19 of the principal Act, which relates to the landlord’s duties on receipt of a bond. The amendment makes it clear that those duties apply also in the case of part-payments on account of a bond. It is further clarified that those duties do not apply in the case of a bond paid by a tenant under a boarding house tenancy, as long as the bond does not exceed 1 week’s rent.
Clause 17 repeals section 22 of the principal Act, which relates to the refund of bonds lodged in respect of tenancies, and replaces that section with new sections 22 to 22E. The current position is that if the parties agree on an application for a refund, the refund is made in accordance with the application. If a party contests an application, the chief executive refers the matter to the Tenancy Tribunal. If a party does not respond, the chief executive has a discretion whether to make the refund or refer the matter to the Tribunal. New sections 22 to 22E modify that position in several respects. First, in cases where the bond is in dispute, it is for the parties, not the chief executive, to take the dispute to the Tenancy Tribunal. If a party applies to the chief executive for a refund of a bond that is in dispute, the chief executive must tell the parties how to apply to the Tenancy Tribunal for determination of their dispute. Secondly, a landlord will not be able to apply to the chief executive if more than 2 months have passed since the termination of the tenancy, but will instead have to apply to the Tenancy Tribunal. Thirdly, if no claim is made within 2 months of the termination of a tenancy or the bond monies are not uplifted within 2 months after a refund is approved, the chief executive is given a discretion to take steps to refund the bond. This includes advertising the names of the persons who may be entitled to the refund. If attempts at refunding a bond prove unsuccessful, the chief executive may, under new section 22E, request the department responsible for administering the Social Security Act 1964 to supply address information to the chief executive for the purpose of refunding the bond. But, before the chief executive makes such a request, he or she must be satisfied that reasonable steps have been taken to locate the person entitled to the bond.
Clause 18 amends section 24 of the principal Act, which relates to rent increases. The section provides that, in the case of fixed-term tenancies, the rent may not be increased otherwise than as permitted by the agreement. The clause substitutes a new subsection (1)(g) to clarify that any rent increase for a fixed-term tenancy is subject to both section 24 and the terms of the agreement. Model provisions that may be included in fixed-term tenancy agreements to authorise rent increases are set out for guidance in new Schedule 1.
The clause also makes consequential amendments to section 24 to provide for shorter periods for rent increases made in the case of boarding house tenancies.
Clause 19 inserts a new section 24A. The new section deals with the case where the parties agree on a reduced rent for a limited time. The new section clarifies that, on the expiry of that time, the parties revert to the original rent and that this does not amount to a rent increase and is accordingly not subject to the requirements of the Act governing rent increases.
Clause 20 amends section 25 of the principal Act, which relates to market rent assessments by the Tenancy Tribunal. The amendment permits a tenant of a unit who is affected by a change in the body corporate rules to apply for such an assessment within 3 months of being notified of the change or otherwise becoming aware of the change.
Clause 21 replaces section 28 of the principal Act with new sections 28 to 28B. Existing section 28 authorises the Tribunal to increase rents where landlords have effected substantial improvements to premises or provided more or better facilities or incurred unforeseeable expenses. The new section 28 allows the parties to agree on rent increases in the case of substantial improvements or the provision of greater or improved services, as well as in the case of variations of the terms of the tenancy agreement. Each change on which a rent increase is based must be to the tenant’s benefit. If the parties cannot agree on an increase, the landlord may apply to the Tribunal for an order increasing the rent. New sections 28A and 28B re-enact, without substantive change, provisions contained in existing section 28.
Clause 22 amends section 32 of the principal Act, which prevents provisions in tenancy agreements requiring the payment of damages, penalties, and sums of a similar nature. The amendment makes an exception for provisions that enable the recovery of expenses incurred in recovering overdue debts.
Clause 23 consequentially amends section 33, which prohibits the seizure of the tenant’s goods. The amendment is consequential on the new Part 2A that provides for boarding house tenancies.
Clause 24 substitutes a new section 39, which relates to responsibility for outgoings. Under the new section the landlord is responsible for all outgoings that are incurred whether or not the premises are occupied, such as general rates, insurance, and, where applicable, body corporate levies. The landlord is also responsible for outgoings for common facilities.
The tenant is responsible for outgoings that are exclusively attributable to the tenant’s occupation of the premises or the use of the facilities. Examples of the tenant’s responsibility include charges for electricity and gas, telephone and Internet, and charges for water based on consumption.
Clause 25 amends section 40 of the principal Act, which relates to the tenant’s responsibilities. Section 40(3) authorises a tenancy agreement to stipulate the maximum number of persons that may reside in the premises. The amendment clarifies that the stipulation affects only the people who ordinarily reside in the premises, and not visitors. New subsection (3A) creates 4 new types of unlawful acts. These are, first, a tenant’s failure, without reasonable excuse, to quit the premises on the termination of the tenancy; secondly, using the premises for an unlawful purpose; thirdly, contravening the obligations imposed by section 40 in circumstances that amount to the harassment of other tenants or neighbours; and, fourthly, contravening a stipulation as to the maximum number of persons who may reside in the premises. The clause also amends section 40(4), which requires the tenant to prove that any damage to the premises was not caused intentionally or negligently. The amendment clarifies that the presumption does not extend to fair wear and tear.
Clause 26 inserts new sections 41A to 41E. These sections enable the Tenancy Tribunal or a court to limit the liability of a tenant to compensate a landlord or owner of premises for damage to the premises.
New section 41A defines terms used in that section and in new sections 41B to 41E.
New section 41B enables the Tenancy Tribunal or a court to limit a tenant’s liability for damage personally caused by the tenant, if satisfied that the tenant did not cause the damage intentionally or recklessly. If the tenant is liable for damage caused by another person, the Tenancy Tribunal or a court may limit the tenant’s liability if satisfied that the tenant did not intentionally or recklessly encourage or permit the other person to damage the premises. Furthermore, if the tenant knew or should have known that the other person was damaging or likely to damage the premises, the Tenancy Tribunal or court must be satisfied that the tenant took all reasonably practicable steps, within the tenant’s capability, to stop the other person. The liability of a tenant cannot be limited if any insurance moneys that would otherwise have been payable to the landlord for the damage are irrecoverable because of an act or omission of the tenant or the tenant’s agent.
New section 41C provides a tenant whose liability has been limited is not liable for more than 4 times the weekly rent payable for the damaged premises when the damage occurred. So, if the damage caused is $1,000 and the weekly rent for the premises is $200, the tenant is liable for $800.
If 2 or more tenants are jointly liable for the same damage and if the liability of each of them has been limited under new section 41B, the joint liability of those tenants does not exceed the maximum amount. So, if the damage caused is $1,000 and the weekly rent for the premises is $200, and there are 2 tenants, each of whom has limited liability, the total amount that the landlord can recover from them is $800. If the landlord recovers $600 from tenant A, the landlord can recover $200 from tenant B (but no more than that).
New section 41D deals with the situation where several persons are liable for the same damage and some have limited liability under new section 41B and others do not. These 2 classes of persons are deemed to be divided into 2 groups, group A and group B. The persons in group A have limited liability under new section 41B and the persons in group B do not have that limitation. The effect of putting the liable persons into 2 groups is to break the joint liability that they would otherwise be bound by. So, if the total damage is $10,000 and the weekly rent is $250, the persons in group B are jointly liable for $10,000 and the members of group A are liable for $1,000. The landlord cannot recover more than $10,000; for example, if the full $1,000 is recovered from group A, only $9,000 can be recovered from group B.
New section 41E preserves existing law under which a person who has compensated someone for damage may obtain a proportionate contribution from another person who is also liable for that damage. But the contributions recoverable from a tenant whose liability has been limited cannot exceed the maximum amount.
Clause 27 amends section 42 of the principal Act to restate the common law position that fixtures put up by the tenant and not removed on the expiry of the tenancy become the property of the landlord. However, this does not apply if there is a contrary agreement or arrangement or if anything the landlord has said or done has led the tenant to reasonably believe that he or she is entitled to remove the fixtures. The clause also reenacts a current provision that makes the tenant liable for any damage caused by removing fixtures.
Clause 28 amends section 44 of the principal Act, which relates to assignments and subletting by tenants. The amendment declares that it is an unlawful act for a tenant to assign or sublet the premises in contravention of a prohibition in the tenancy agreement. In the absence of such a provision, the tenant needs the prior written consent of the landlord. The amendment also makes it an unlawful act for a tenant in that position to assign or sublet the premises without that consent.
Clause 29 amends section 45 of the principal Act, which relates to the landlord’s responsibilities. The amendment requires a landlord of premises without a reticulated water supply to provide adequate means for the collection and storage of water. It also adds 2 new types of unlawful acts for which landlords are liable; first, failing to comply with the obligations imposed by section 45(1) concerning cleanliness, maintenance, and health and safety, and, secondly, interfering with the supply of services (eg, electricity). The clause also clarifies that the landlord’s obligation to compensate a tenant for repairs paid for by the tenant arises not just when the tenant has attempted to notify the landlord of the disrepair but also when the tenant has successfully done so.
Clause 30 amends section 48 of the principal Act, which sets out a landlord’s rights to enter the premises. A new paragraph is inserted to make it clear that a landlord may enter premises if that is necessary to enable services to be provided in accordance with the tenancy agreement. The existing section gives the landlord the right to enter the premises so that the premises can be shown to prospective tenants or purchasers or to a registered valuer. The amendment extends those categories of persons to include experts or real estate agents engaged to appraise or sell the premises as well as persons authorised to inspect the premises under an enactment. The maximum fine for a landlord who uses, or threatens to use, force in entering premises is increased from $500 to $2,000.
Clause 31 amends section 50 of the principal Act, which relates to the circumstances in which tenancies are terminated. The amendment clarifies that fixed-term tenancies may be terminated by notice if a mortgagee takes possession of the premises or in the circumstances, involving the destruction of or serious damage to the premises, set out in section 59 and new section 59A.
Clause 32 amends section 51 of the principal Act, which relates to the length of the notice required to be given to terminate a tenancy. Generally, the landlord must give 90 days’ notice, and the tenant 21 days’ notice. There are, however, special cases where the landlord need only give 42 days’ notice. These include cases where the landlord requires the premises for occupation by the landlord or a member of the landlord’s family and where the landlord has sold the premises and is required to give vacant possession. Clause 32 amends section 51 in 3 ways. First, a notice that gives the tenant less than 90 days’ notice for the termination must set out the reasons for the termination. Secondly, it is made clear that, in order to qualify for the shorter period of 42 days on the ground that the premises are required by the landlord, the premises must be required by the person who owns the premises or by a member of that person’s family. A requirement by a non-owner, such as the landlord’s agent, will not qualify. Further, the premises must be required as the principal place of residence by the owner or a member of his or her family. Thirdly, the justification for giving only 42 days’ notice on the ground of having to give vacant possession under an agreement for sale and purchase is limited to agreements that have become unconditional.
Clause 33 makes consequential amendments to section 53, which relates to the termination of service tenancies. The amendments are consequential on the amendment in clause 4 that extended the definition of service tenancy to include a tenancy linked to a contract for services.
Clause 34 inserts a new section 53A to provide for a period of notice of 14 days in cases where a tenant, who has been granted a tenancy because of his or her status as a student, ceases to be an eligible tenant.
Clause 35 makes a consequential amendment to section 54(1) of the principal Act to extend the provisions relating to retaliatory notice to boarding house tenancies.
Clause 36 amends section 55 of the principal Act, which, among other things, requires the Tenancy Tribunal to terminate a tenancy if satisfied that the tenant has assaulted specified persons, including the landlord or members of the landlord’s family. The amendment adds to those persons the owner of the premises and members of the owner’s family.
Clause 37 amends section 56, which relates to the Tenancy Tribunal’s power to terminate tenancies. The purpose of the amendment is to clarify that the procedure under that section is also available to landlords who wish to terminate tenancies on the ground that the rent is in arrears.
Clause 38 amends section 58 of the principal Act, which relates to cases where mortgagees become entitled to the possession of the premises and take the place of the landlord for certain purposes. The existing section gives the mortgagee the right to terminate a fixed-term tenancy as if it were a periodic tenancy. The amendment gives tenants the corresponding right to terminate a fixed-term tenancy as against mortgagees in possession.
Clause 39 amends section 59 of the principal Act, which concerns the right to give notice where premises are destroyed or rendered uninhabitable. The amendment clarifies that the section applies to fixed-term tenancies as well as periodic tenancies.
Clause 40 inserts new section 59A which provides for reduced periods of notice or abatement of rent where the destruction of premises or serious damage to the premises rendering them uninhabitable is the fault of either party. In that case, the party who is not at fault may give a shorter period of notice terminating the tenancy (7 days’ notice, in the case of the landlord, and 2 days’ notice, in the case of the tenant).
Clause 41 inserts new sections 60A to 60C. The new section 60A automatically converts expired fixed-term tenancies into periodic tenancies on the same terms as the expired tenancy, unless either party gives notice to the contrary within a period starting 90 days before the expiry of the tenancy, and ending 21 days before the expiry. The Tribunal may order that a tenancy continued as a periodic tenancy under this section be terminated at an earlier date. The Tribunal needs to be satisfied that the hardship the applicant would suffer from the effect of the continuation of the tenancy exceeds the hardship the other party will suffer from the early termination. The applicant may be required to compensate the other party for any loss resulting from the early termination.
New section 60B requires the tenant to exercise any right to a renewal or extension of the tenancy by giving written notice to the landlord. The notice must be given not later than the 21st day before the expiry of the tenancy. If a tenant fails to comply with the notice requirement, the Tribunal may nevertheless order a renewal or extension, if satisfied that without the order the tenant would suffer greater hardship than the landlord.
New section 60C clarifies the position regarding rent increases where a tenancy is extended or renewed. The new section makes it clear that the fact that a tenancy is extended or renewed is not a separate justification for a rent increase.
Clause 42 amends section 61, which relates to the abandonment of premises. It declares that a tenant commits an unlawful act if, without reasonable excuse, he or she abandons the premises when the rent is in arrears.
Clause 43 amends section 62 of the principal Act, which relates to abandoned goods. The amendment clarifies that the Tribunal may, in making an order for the sale of abandoned goods, give the tenant a final opportunity to collect the goods. In that case, the goods may not be sold unless the tenant has had that opportunity. As with other orders made by the Tenancy Tribunal, the order may be made conditional on the performance of a party’s obligations.
Clause 44 amends section 63 of the principal Act, which prohibits a landlord from repossessing premises without the consent of the tenant or a possession order of the Tenancy Tribunal. The amendment changes the current penalty for a breach from a maximum 3 months’ imprisonment or a maximum fine of $1,000 to a maximum fine of $2,000.
Clause 45 makes a technical amendment to section 64 of the principal Act, which relates to possession orders. The existing section requires a possession order to be made within 3 months of the termination of a tenancy. The amendment changes that period to 90 days.
Clause 46 amends section 65 of the principal Act, which relates to the eviction of squatters. The amendment clarifies that the Tenancy Tribunal has jurisdiction to make possession orders even though the premises concerned are not subject to a tenancy agreement.
Clause 47 amends section 66, which relates to the power of the Tenancy Tribunal to reduce the term of fixed-term tenancies. The amendment authorises the Tribunal, on the application of the tenant, to terminate a fixed-term tenancy ahead of time on either of 2 grounds. The first ground is that there has been a rent increase that is substantial, that was not reasonably foreseeable at the conclusion of the agreement, and that will cause serious hardship. The second ground is if a tenant of a unit under the Unit Titles Act 1972 is adversely affected by a change in the body corporate rules.
New Part 2A inserted
Clause 48 inserts a new Part 2A relating to boarding house tenancies into the principal Act.
New section 66A provides that the Part sets out special provisions relating to boarding house tenancies, and identifies those provisions of the principal Act that do not apply. The provisions in this Part are generally in substitution for the provisions of the rest of the Act that do not apply. The section also modifies the application of new sections 41A to 41D, which enable limits to be placed on tenants’ liability for damage. The base for calculating the liability of a boarding house tenant is the weekly rent payable by the tenant, not the weekly rent for the premises.
New section 66B defines key terms used in the Part. Boarding houses are defined as residential premises containing 1 or more boarding rooms along with facilities for communal use by the tenants, and intended to be occupied by at least 6 tenants. A boarding house tenancy is one that is intended to, or does in fact, last for 28 days or more. Provision has been made for the fact that in some boarding houses tenants may share a boarding room with another tenant, in which case tenants do not get an exclusive right to occupy a boarding room, only sleeping quarters in a room.
New section 66C sets out the requirements of a boarding house tenancy agreement, which are additional to those required of other tenancies under section 13A of the principal Act.
New section 66D is about bonds. Boarding house landlords do not have to lodge bonds with the chief executive, if the bond is for no more than 1 week’s rent.
New section 66E allocates responsibility for outgoings incurred in respect of a boarding house. The landlord is responsible for all ongoing outgoings that are incurred whether or not the boarding house is occupied (eg, rates), for common facilities, and for outgoings incurred in respect of rooms occupied by more than 1 tenant. A tenant is responsible for all outgoings that are exclusively attributable to the tenant’s occupation of a room that is exclusively occupied by the tenant. Examples are separately metered electricity supplied to the tenant’s room or charges for a telephone connected to the tenant’s room. The landlord must provide the tenant each week with an itemised account for any services, where payment for the services is not included in the rent.
New section 66F provides that boarding house tenancies, unlike some other residential tenancies, are not assignable by the tenant.
Rights and obligations of landlords and tenants
New section 66G sets out the basic entitlement of the tenants to quiet enjoyment of the premises, and reflects section 38 of the principal Act.
New section 66H sets out the landlord’s obligations at the start of a tenancy. These include providing the tenant with a copy of the house rules and schedule of services, and providing the room in reasonable order. This section reflects sections 36, 37, and 45(1)(a) of the principal Act.
New section 66I sets out the landlord’s ongoing obligations. These include ensuring that the premises are kept in a reasonable state of cleanliness and repair, and that all statutory requirements relating to buildings, health, and safety are complied with. Failure to comply with those particular obligations is declared to be an unlawful act. Other obligations include ensuring that the tenant has access at all times to his or her room and to toilet and bathroom facilities, as well as access at all reasonable hours to other facilities. This section reflects section 45 of the principal Act.
New section 66J sets out some further obligations of the landlord. The landlord must not interfere with the supply of gas, or telephone services. Every tenant of the boarding house must be told before locks are changed. A failure to comply with these obligations is an unlawful act. Tenants must also be told if the premises are put on the market. This section reflects sections 45(2), 46(2), and 47 of the principal Act.
New section 66K sets out the obligations of the tenant. These include paying the rent on time; ensuring that the tenant’s boarding room is occupied principally for residential purposes, and is kept reasonably clean and tidy; observing the house rules; notifying the landlord of damage; and paying for damage caused by the tenant. The section also lists things that a tenant must not do, such as intentionally or carelessly damaging the premises, making alterations to the premises, or interfering with the peace, comfort, or privacy of neighbours. This section reflects sections 40, 42, and 46(2) of the principal Act.
New section 66L sets out when the tenant is liable for damage. This section reflects sections 40(4) and 41 of the principal Act.
New section 66M sets out the tenant’s obligations at the end of a tenancy. This section reflects section 40(1)(e) of the principal Act.
New section 66N imposes an obligation to mitigate damage. This section reflects section 49 of the principal Act.
New section 66O is a provision unique to boarding houses. It authorises a landlord to make house rules. House rules may not be inconsistent with the principal Act, or require or purport to permit anything that is or would be illegal.
New section 66P provides that a tenant who objects to a house rule, or to the way a house rule is being applied, may apply to the Tribunal for an order declaring the house rule unlawful, requiring the landlord to apply the house rule in a particular manner, varying the rule, or setting the rule aside. A landlord who breaches the order commits an unlawful act.
Landlord’s right of entry
New section 66Q states the basic rule that a landlord may enter a boarding house at any time. The landlord may not use the facilities for his or her own domestic purposes unless he or she resides at the boarding house.
New section 66R sets out the circumstances in which a landlord may enter a boarding room. Subsection (2) sets out a procedure under which the landlord may enter after giving the tenant 24 hours’ written notice.
New section 66S sets out the requirements of the notice of entry, and the purposes for which entry is authorised using the notice procedure. The tenant may be notified orally or in writing.
New section 66T provides that certain kinds of abuse by the landlord of the right of entry, and refusal by a tenant to allow a lawful entry, are unlawful acts. A landlord who uses or threatens to use force to obtain entry commits an offence. If a landlord does not comply with the proper procedures for effecting entry by the notice procedure, the tenant may apply to the Tribunal for an order prohibiting the further exercise of that power.
New section 66U sets out when a landlord may terminate a tenancy. The landlord may terminate a tenancy—
immediately, if the tenant causes, or threatens to cause, serious damage, or endangers, or threatens to endanger, people or property or causes, or threatens to cause, serious disruption to other residents:
on 48 hours’ notice, if the tenant is more than 7 days in arrears with rent, is using the room for an illegal purpose, or has abandoned the room:
on 14 days’ notice, if reconstruction, repairs, or renovations are required:
on 28 days’ notice, in which case no reason need be given (but note that section 54 of the principal Act, which provides protection against notice being served as a retaliatory measure, applies to boarding house tenancies).
The section also sets out the formal requirements for a termination notice.
New section 66V provides that a tenant may terminate a tenancy by giving 48 hours’ notice, and that the notice need not be in writing.
New section 66W sets out a procedure for when the landlord thinks the tenancy has been abandoned. The landlord may, on giving 24 hours’ notice, enter the room, and must make all reasonable efforts to contact the tenant’s contact person (if one has been identified in the tenancy agreement). The landlord may then terminate the tenancy on 48 hours’ notice.
New section 66X sets out the landlord’s duties with respect to a tenant’s abandoned goods. The landlord must store the tenant’s goods for 35 days, during which time the tenant or the contact person may claim the goods, on payment of actual and reasonable storage costs. After 35 days, the landlord must deliver any personal papers to the police, may dispose of goods worth less than $100, and must apply to the Tribunal for an order about what to do with goods worth more than $100.
New section 66Y provides for the landlord to apply to the Tribunal for a possession order. The section reflects section 64 of the principal Act.
Clause 49 removes the current bar in section 67 of the principal Act on appointing Tenancy Adjudicators aged 70 years and over. It also makes consequential amendments.
Clause 50 removes the current provision in section 68 of the principal Act requiring Tenancy Adjudicators to retire on attaining the age of 70. It also makes an amendment to section 68 that is consequential on the new definition of Minister.
Clause 51 amends section 71 of the principal Act, which relates to the conduct of the Tenancy Tribunal and the stationing of Tenancy Adjudicators. The section currently requires sittings of the Tenancy Tribunal to be held, at the discretion of the Principal Tenancy Adjudicator, at the places specified in existing Schedule 1 or at other places directed by that officer. Existing Schedule 1 is repealed by clause 86. Section 71 is amended to require sittings of the Tenancy Tribunal to be held at the places the chief executive directs.
Clause 52 substitutes a new section 72 of the principal Act, which relates to Registrars of offices of the Tenancy Tribunal. The substituted section discontinues the requirement that offices of the Tenancy Tribunal must be situated in the places specified in existing Schedule 1, and reflects, in accordance with section 14 of the State Sector Amendment Act 2003, the change from the former Department for Courts to the successor department, which is the Ministry of Justice. The new section also omits a reference to Tenancy Officers because that office is discontinued.
Clause 53 amends section 73 of the principal Act, which relates to the seal of the Tenancy Tribunal. The amendment is consequential on section 14 of the State Sector Amendment Act 2003, which requires references to the former Department for Courts to be read as references to the Ministry of Justice.
Clause 54 repeals section 75 of the principal Act, which sets out the locations for offices of the Tenancy Tribunal and provides for Tenancy Officers.
Clause 55 makes consequential amendments to section 76 that are consequential on the discontinuation of the office of Tenancy Officer and the new definitions of department and Minister.
Clause 56 makes several amendments to section 77 of the principal Act, which relates to the jurisdiction of the Tenancy Tribunal. The jurisdiction of the Tribunal is affected in 4 respects. First, its jurisdiction is made subject to the Limitation Act 1950. Second, its monetary jurisdiction is extended from $12,000 to $50,000. Third, it is given jurisdiction to determine disputes between landlords and guarantors. Fourth, it is precluded from determining disputes so far as they concern the provision by the landlord of health and disability services about which complaints may be taken to the Health and Disability Commissioner. The clause also makes consequential amendments to extend the jurisdiction of the Tribunal to deal with boarding house tenancies and the matters provided for in new Part 2A.
Clause 57 amends section 78 of the principal Act, which relates to the orders that the Tenancy Tribunal may make. Section 78 is amended to permit an owner of premises that have not been let to apply to the Tenancy Tribunal for an order declaring the status of those premises. The application may be made without notice. An order made on such an application is binding in any subsequent proceedings, but the Tenancy Tribunal may rescind the order if satisfied that it is wrong or that there has been a change in circumstances.
Clause 58 inserts a new section 83A to enable the Tenancy Tribunal to refer disputes about the provision of health or disability services (which it lacks jurisdiction to determine) to the Health and Disability Commissioner, following consultation with that officer.
Clause 59 substitutes new sections 86 and 87. Section 86 relates to the particular office of the Tenancy Tribunal where proceedings must be commenced. The current provision requires proceedings to be commenced in the office that is nearest to the premises to which the dispute relates. Under the substituted section 86, the appropriate office will be determined by the chief executive. The chief executive must determine the appropriate office by reference to areas for which each office is responsible. These determinations must be published in the Gazette and on the Internet. The existing section 87 requires a Tenancy Officer to refer applications to a Tenancy Mediator. The substituted section 87 permits the chief executive, on whom the functions of the Tenancy Officers will devolve, to refer applications to a Tenancy Mediator unless there is a contrary regulation or direction given by the Principal Tenancy Adjudicator or a party does not want the application mediated.
Clause 60 amends section 88 of the principal Act, which relates to the functions of Tenancy Mediators. The clause makes amendments that are consequential on the discontinuation of the office of Tenancy Officer. Under the existing section, a Tenancy Adjudicator may refer a matter back to a Tenancy Mediator instead of approving an order made by that Tenancy Mediator. Under the amendment made by the clause, the reference will not be back to the original Tenancy Mediator but to the chief executive, who will assign the case to an appropriate Tenancy Mediator.
Clause 61 amends section 90, which requires Tenancy Mediators to observe confidentiality. The amendment increases the maximum fine for improper disclosure from $500 to $1,000.
Clause 62 inserts 2 new provisions into the principal Act. New section 91A provides that a notice given to a tenant in any one of certain specified ways is deemed to have been properly served, provided the application to which the notice relates was lodged within 2 months after the end of the tenancy. This is partly to encourage landlords to lodge applications promptly, and partly to overcome the problem of tenants refusing to accept service or not leaving a forwarding address. In that case, the landlord cannot serve the tenant, and therefore his or her application may not be able to be dealt with. Under this new provision, a notice served at the tenant’s address for service is deemed to be properly served, which means an application can proceed. However, if the landlord’s application is lodged more than 2 months after the termination of the tenancy, the effect of this section is that the landlord will have to actually locate the tenant and serve him or her, and cannot rely, for example, on posting the notice to the address for service.
New section 91B provides that the Tribunal may hear and determine, or dismiss or adjourn, a matter if it is satisfied that all reasonable efforts have been made to serve a respondent, and any failure to serve the respondent is not due to the fault or unreasonable delay of the applicant. The purpose of this new provision is to allow a proceeding that is effectively halted because the respondent has disappeared to proceed.
Clause 63 amends section 92 of the principal Act. That section currently allows the Tribunal to hear and determine, or dismiss or adjourn, a proceeding even if the parties do not appear, as long as they have been properly served with notice. The amendment confirms that the present provision applies even if neither party appears, but provides that, in that case, the Tribunal may determine the matter only if it is satisfied that it has all the written information it needs to make a proper determination.
Clause 64 amends section 93 of the principal Act, which sets out who may appear before the Tenancy Tribunal. Generally, a party may not be represented by counsel or a representative unless certain exceptions apply. One of these is if the amount in dispute exceeds $3,000. The clause raises that amount to $6,000. The clause also amends section 93 to extend the persons who may be approved, or appointed, to represent individuals or entities that need to be represented. Currently, persons regularly engaged in advocacy work before tribunals are disqualified from representing parties before the Tenancy Tribunal. The clause removes that disqualification.
Clause 65 amends section 95 of the principal Act, which provides that proceedings before the Tenancy Tribunal are usually to be held in public and enables the Tribunal to order certain hearings to be held in private, and also to make non-publication orders. The amendment enables the Tribunal to make those orders on its own initiative, not just, as at present, on the application of a party.
Clause 66 amends section 99 of the principal Act, which enables the Tenancy Tribunal to refer particular issues of fact to a Tenancy Mediator for a report or to refer particular issues for mediation to such an officer. The amendment allows the Tribunal to appoint persons other than Tenancy Mediators for such references, if the Tribunal is satisfied that the person to be appointed is suitably qualified or experienced.
Clause 67 amends section 102 of the principal Act, which governs awards of costs by the Tenancy Tribunal. The amendment entitles an applicant who has been wholly successful in his or her application to obtain a refund from the respondent of the filing fee paid for the application. If the applicant has been only partly successful, the Tribunal has a discretion to order the respondent to refund the filing fee. The amendment also permits the Tribunal to award costs for any reasonable expenses or commissions incurred in attempting to recover an overdue payment owing under an order of the Tribunal if the tenancy agreement provides for the recovery of those expenses.
Clause 68 amends section 108 of the principal Act, which relates to the enforcement of work orders. New subsection (2A) declares the intentional breach of such an order to be an unlawful act.
Clause 69 amends section 109 of the principal Act to increase the amounts that the Tenancy Tribunal may award as exemplary damages for certain unlawful acts and to set new amounts for acts declared to be unlawful acts by other clauses in the Bill. The following table shows the effect of the amendment:
|Unlawful acts|| ||Section ref||Proposed ($)||Current ($)|
|Unlawful discrimination|| ||12||4,000||3,000|
|Landlord failing to appoint agent when outside New Zealand for longer than 3 weeks|| ||16A(5)||1,000||(new)|
|Requiring key money|| ||17||1,000||750|
|Landlord requiring bond greater than amount permitted|| ||18||1,000||750|
|Requiring unauthorised form of security|| ||18A||1,000||(new)|
|Breach of duties of landlord on receipt of bond|| ||19(2)||1,000||750|
|Landlord requiring rent more than 2 weeks in advance or before rent already paid expires|| ||23||1,000||750|
|Landlord requiring rent in excess of market rent order|| ||27(2)||200||150|
|Failure by landlord to give receipts for rent|| ||29||200||150|
|Landlord seizing or disposing of tenant’s goods|| ||33||2,000||1,500|
|Interference with privacy of tenant|| ||38(3)||2,000||1,500|
|Failing to quit the premises on termination without reasonable excuse|| ||40(3A)(a)||1,000||(new)|
|Using or permitting premises to be used for unlawful purpose|| ||40(3A)(b)||1,000||(new)|
|Harassing other tenants or neighbours|| ||40(3A)(c)||2,000||(new)|
|Tenant failing to ensure number of residents does not exceed maximum allowed|| ||40(3A)(d)||1,000||(new)|
|Assigning or subletting a tenancy when prohibited to do so or without the landlord’s written consent|| ||44(2A)||1,000||(new)|
|Landlord’s failure to meet obligations in respect of cleanliness, maintenance, or building or health and safety requirements|| ||45(1A)||3,000||(new)|
|Landlord interfering with supply of services to premises|| ||45(2A)||1,000||(new)|
|Altering locks without consent of other party|| ||46(3)||1,000||750|
|Unlawful entry by landlord|| ||48(4)(a)||1,000||750|
|Abandonment of premises without reasonable excuse|| ||61(5)||1,000||(new)|
|Harassment of tenant in boarding house|| ||66G(4)||2,000||(new)|
|Landlord of boarding house failing to meet obligations in respect of cleanliness, maintenance, or building or health and safety requirements|| ||66I(4)||3,000||(new)|
|Landlord of boarding house interfering with services or failing to advise that premises on the market|| ||66J(4)||1,000||(new)|
|Tenant of boarding house using or permitting premises to be used for unlawful purposes|| ||66K(4)(a)||1,000||(new)|
|Tenant of boarding house harassing neighbour|| ||66K(4)(b)||2,000||(new)|
|Landlord of boarding house failing to comply with order relating to house rules|| ||66P(4)||2,000||(new)|
|Contraventions relating to entry, or attempted entry, of tenant’s room in boarding house|| ||66T(1)||1,000||(new)|
|Abandonment of premises without reasonable excuse|| ||66W(5)||1,000||(new)|
|Landlord of boarding house disposing of tenant’s goods otherwise than in accordance with section|| ||66X(6)||2,000||(new)|
|Intentional breach of work order|| ||108(2A)||3,000||(new)|
|Contracting to contravene or evade the provisions of the Act|| ||137(2)||1,000||750|
Clause 69 also provides that a person may be ordered to pay exemplary damages for committing an unlawful act even though the person has been charged, convicted, or acquitted of the offence of breaching an order restraining that act.
Clause 70 inserts new section 109A, which enables the Tenancy Tribunal to restrain persons from committing further unlawful acts. The unlawful act must be of the same kind as the act for which the person has been ordered to pay exemplary damages under section 109. Breach of a restraining order is an offence punishable by a maximum fine of $2,000.
Clause 71 amends section 110 of the principal Act, which makes it an offence to fail to answer a witness summons of the Tenancy Tribunal or fail to give evidence. The maximum fine is increased from $1,000 to $2,000.
Clause 72 amends section 112, which makes certain acts committed against the Tenancy Tribunal or its officers punishable as contempt. The maximum fine is increased from $1,000 to $2,000.
Clause 73 inserts new sections 112A to 112F to establish a procedure to assist parties who have obtained a Tenancy Tribunal order in their favour to enforce that order. New sections 112A to 112F provide that judgment creditors may apply to the chief executive of the Department of Building and Housing for contact information about a judgment debtor. The chief executive may then ask specified agencies to search their specified databases for contact information that may assist in the enforcement of the order. That information will be provided to the Secretary for Justice who will forward it to the District Court in which enforcement proceedings may be commenced. The information is only available for the purposes of the enforcement proceedings, and may not be disclosed to the judgment creditor or to any other person.
Clause 74 substitutes a new section 113, which requires the chief executive to provide assistance to members of the public. The substitution is consequential on the discontinuation of the office of Tenancy Officer.
Clause 75 amends section 114, which provides for the powers of entry of Tenancy Mediators. The amendment discontinues the current requirement for the production of warrants of appointment when Tenancy Mediators enter premises. Instead, they will be required to produce evidence of identity. The fine for obstructing a Tenancy Mediator is increased from $1,000 to $2,000.
Clause 76 consequentially amends section 116 of the principal Act to replace references to Tenancy Mediators Officers with chief executive.
Clause 77 amends section 117 of the principal Act, which relates to appeals to the District Court. The amendment clarifies that a decision by the Tenancy Tribunal to grant, or refuse to grant, an application for a rehearing may be appealed.
Clause 78 amends section 123 of the principal Act, which relates to the functions and powers of the chief executive of the Department of Building and Housing. The amendment adds a new function of supervising the operations of the Tenancy Tribunal in close co-operation with the Registrar so that disputes are dealt with efficiently and expeditiously. That function is currently conferred on Tenancy Officers by section 75, which is repealed by clause 54.
Clause 79 makes an amendment to section 126 that is consequential on the new definition of department.
Clause 80 amends section 127 of the principal Act, which relates to the Residential Tenancies Trust Account. The amendment provides that all unclaimed bond money held by the chief executive must be paid to the Crown if it has not been collected 6 years after the termination of the relevant tenancy or 6 years after its refund has been approved. The chief executive currently holds a significant amount of unclaimed bond money and is unable to do anything with it. This clause should be read in the context of new sections 22D and 22E of the principal Act, which authorise the chief executive to take steps to refund unclaimed bond money.
Clause 81 amends section 133 of the principal Act, which enables the Tribunal or chief executive to require information about the terms of tenancy agreements. The maximum fine for breaches is increased from $200 to $400.
Clause 82 amends section 136, which relates to service of documents. The amendments allow documents to be served by sending them to a Post Office box or email address if the recipient has agreed to service in that form.
Clause 83 inserts a new section 136A, which clarifies when a period, following a notice given under the principal Act, starts and ends. The period starts on the first day following the day on which the notice is given or is deemed to be given, and ends with the last day of the period.
Clause 84 amends section 140 of the principal Act, which enables the Governor-General in Council to make regulations. The amendment enables databases held by the Ministry of Justice, the Ministry of Social Development, and the Department of Building and Housing to be specified as databases that must be searched under new section 112C.
Clause 85 repeals section 141, which provides for amendments to Schedule 1, which sets out the locations of the offices of Tenancy Tribunals. The repeal is consequential on the repeal of section 75.
Clause 86 repeals existing Schedule 1, which sets out the places at which offices of the Tenancy Tribunal must be situated, and substitutes new Schedules 1 and 1A, which set out standard clauses for rent increases in fixed-term tenancy agreements and the maximum amounts that may be awarded for unlawful acts.
Clause 87 states the general proposition that the amendments made by the Bill apply to tenancies in existence before the relevant amendment took effect.
Clause 88 states exceptions to the general proposition stated in Clause 87. Certain amendments made by the Bill will not apply to existing tenancies.
Clause 89 defers the application of certain new provisions to existing tenancies. The new provision that requires a landlord to have an agent if he or she is out of New Zealand for longer than 21 consecutive days will not apply to existing tenancies until the expiry of 6 months after the provision comes into force. The new provisions that set out the circumstances in which fixed-term tenancies become periodic tenancies are similarly deferred for 12 months.
Clause 90 provides that the new Part 2A, other than provisions relating to the content of tenancy agreements, applies to all boarding house tenancies, including pre-existing ones, from the date that the new sections governing boarding houses come into force.
Clause 91 provides that bond refund applications received before the relevant commencement date must be dealt with under the previous provisions.
Clause 92 provides that applications to the Tenancy Tribunal made before the relevant commencement date must be dealt with under the previous provisions. It further provides that the Tenancy Tribunal may not deal with any matter, or make any order, that arises before that commencement date if it could not have dealt with the matter, or made the order, at the time the matter arose.
Clause 93 makes it clear that the provisions in the Bill concerning unlawful acts will not apply to acts or omissions that occur before those provisions come into force. Such acts or omissions must be dealt with in accordance with the principal Act as in force at the time of the act or omission.
Regulatory impact statement
Statement of nature and magnitude of problem and need for government action
In 2004 Cabinet agreed to review the Residential Tenancies Act 1986 (the RTA) with the objective being to improve the effectiveness and efficiency of the RTA in regulating the residential rental market (SDC Min (04) 11/1 refers). The review of the RTA (the review) identified 5 key issues—
insufficient compliance, dispute resolution and enforcement:
lack of knowledge about landlords’ and tenants’ rights and obligations:
mixed capability to manage property and tenants:
variable standards of rental housing:
lack of stable tenure for longer term tenants.
In addition, the review identified a number of secondary policy issues, including issues relating to rent arrears, rent increases, payment of outgoings, termination of tenancies, security for tenants’ obligations, rights of entry, landlord absenteeism and Tenancy Tribunal (the Tribunal) procedure.
The review also identified some situations where the interface between the RTA and other statutes can result in unfair or inconsistent outcomes for parties to tenancy agreements. Questions have also been asked about the appropriateness of excluding certain types of tenancies from the RTA’s coverage. Some aspects of tenancies that are excluded from the RTA’s coverage are subject to other legislation and the common law. However, the lack of a consolidated regulatory framework for these tenancies means that tenancy-specific rights are inadequate, information is difficult to access and support structures are fragmented.
The Residential Tenancies (Damage Insurance) Amendment Bill raised questions about tenants’ liability for damage caused by others and by careless damage.
The specific problems identified in the review, along with the status quo and the preferred options to address the problems, are detailed in the feasible options section.
Statement of public policy objective
The public policy objective is to encourage the development of a rental market that provides stable, quality housing to those who rent their homes and to enable landlords to manage their residential rental properties effectively. The review is a primary initiative under the New Zealand Housing Strategy, which sets out priorities for housing and a programme of action to lead the sector over 10 years.
Statement of feasible options (regulatory and/or non-regulatory) that may constitute viable means for achieving desired objective(s)
This section outlines—
the problems associated with the RTA:
the status quo if the RTA were to continue to regulate the residential rental market:
the preferred option to address each problem.
The status quo is not the preferred option as it does not make any changes to address the 5 key issues above or to enable the RTA to achieve the public policy objective. This is because some of the provisions of the RTA lack clarity or flexibility, impede the efficient provision of dispute resolution services, or do not appropriately balance the needs of landlords and tenants. In addition, the status quo is not preferred as it—
excludes some tenancies which are not adequately covered by other legislation:
lacks a requirement for landlords to disclose body corporate rules (or changes to the rules which may have unfair outcomes for the tenants), so tenants may be unaware of their obligations which may lead to disputes:
means the extent to which tenants can be held liable for damage to premises is excessively harsh where—
Statement of problems, status quo and preferred options
Payment of outgoings
The RTA is not flexible enough to accommodate the various ways suppliers charge for utilities and services since they were unbundled from the general rates bill. The RTA also lacks clarity with respect to tank water and shared services. The resulting confusion can give rise to disputes and inconsistent Tribunal decisions.
Landlords are required to pay for all outgoings, with the exception of electricity, gas, telephone charges and metered water (provided that the premises have a separate water meter and the tenancy agreement states that the tenant will pay for water charges).
Amend the RTA to—
introduce principles under which—
landlords are responsible for charges which would be incurred regardless of whether the premises are occupied and charges for common facilities:
tenants are responsible for charges which can be exclusively attributed to their occupation of the premises, or their use of facilities:
require landlords of premises where the supply of water is not reticulated to ensure that adequate provision (to be determined by an adjudicator) is made for the collection and storage of water.
Termination of tenancies by notice
Some aspects of the RTA’s provisions relating to how and when tenancies can be ended ‘with notice’ lack clarity and/or do not reflect the intent of the provision. As a result, landlords sometimes give invalid notices to tenants, which can cause problems for both parties and lead to disputes.
Tenants are required to give at least 21 days’ notice to end a periodic tenancy. Landlords must give at least 90 days’ notice generally, or at least 42 days’ notice where the premises—
have been sold with vacant possession:
are required for occupation by the landlord or their family member:
are required for occupation by an employee of the landlord (subject to a clause being included in the tenancy agreement).
Amend the RTA to—
clarify that landlords must state a reason if ending a periodic tenancy on less than 90 days’ notice:
replace ‘occupation by the landlord or their family member’ with ‘where the person who owns the premises requires the premises as the principal place of residence for that person or any member of that person’s family’:
clarify that an agreement for sale and purchase must be unconditional before a landlord can give 42 days’ notice to end a periodic tenancy due to the sale:
clarify that where a party has given notice to end a tenancy and wishes to give another notice that would change the termination date, the first notice must be revoked with the other party’s consent.
Expiry of fixed-term tenancies
The RTA’s provisions relating to the expiry of fixed-term tenancies are commonly misunderstood and open to abuse. In particular—
landlords and tenants often mistakenly believe that fixed-term tenancies ‘roll over’ to periodic upon expiry of the fixed term, and fail to renew the tenancy on the basis of that mistaken belief. This can leave a tenant with no security of tenure, and a landlord with no certainty over rental income:
landlords sometimes grant rights of renewal without understanding the implications of such a right, and without stipulating how the right is to be exercised and whether the rent may be increased upon renewal:
some landlords use fixed-term tenancies of short duration (eg, one month) as trial periods, that enable landlords to evict tenants on little or no notice for grounds that are not justified under the RTA (eg, requesting repairs).
A fixed-term tenancy simply ends upon expiry unless the parties agree otherwise or the tenant exercises a right of renewal. If no new agreement is reached, but the landlord permits the tenant to remain in the premises for more than 90 days after expiry, the tenancy automatically becomes periodic and the standard notice periods are required to end the tenancy. However, within the 90 day ‘limbo’ period, the landlord can require possession and the tenant can return possession at any time without notice.
Amend the RTA to—
provide for fixed-term tenancies of more than 90 days’ duration to automatically become periodic upon expiry, unless—
the parties enter into a new agreement; or
one of the parties informs the other in writing of their intention not to enter into another tenancy, at least 21 days prior to the expiry of the term:
prescribe how rights of renewal work—tenants will be required to renew the tenancy in writing at least 21 days prior to the expiry of the term, and landlords will be able to increase the rent in accordance with the terms of the agreement:
provide the Tribunal with the ability to grant relief from—
a landlord’s refusal to renew a tenancy where the tenant has failed to correctly exercise a right of renewal; or
the conversion of a fixed-term tenancy to periodic where a party has failed to correctly inform the other party of their intention not to renew the tenancy:
prohibit the use of fixed-term tenancies of 90 days or less as trial periods. (This doesn’t prohibit the use of fixed-term tenancies of 90 days or less for other purposes.):
reduce the maximum timeframe for ‘short fixed-term tenancies’ (which are exempt from some of the RTA’s provisions) from 120 days to 90 days for consistency with the above proposals.
Termination in special circumstances
As the definition of a ‘service tenancy’ only applies to employees and not to self-employed contractors, landlords who hire and provide housing to self-employed contractors cannot give short notice to end the tenancy. This means the landlord must give standard notice, even where the contract with the contractor has ended and the premises are required to house a replacement worker.
Because a mortgagee may become entitled to terminate a fixed-term tenancy with notice but the same right is not afforded to the tenant, the tenant may lose their security of tenure but still be bound to the fixed term themselves.
Where premises become uninhabitable due to a breach by one of the parties, the other party must use the generic provisions of the RTA to end the tenancy if they cannot reach an agreement between all parties. This will involve giving the standard notice period applicable, or applying to the Tribunal for a termination order, and will take much longer than if the premises had become uninhabitable through no fault of either party. A tenant who is not at fault may have to continue paying rent until the tenancy ends and seek that rent back by way of compensation.
A service tenancy is one which arises from a contract of service between a landlord as employer and a tenant as employee. Parties to service tenancies can give reduced notice to end the tenancy if notice has been given to end the contract of service.
Where a mortgagee becomes entitled to possession of premises which are the subject of a fixed-term tenancy, they are entitled to give notice to end the tenancy as though it were periodic (unless they agreed to the creation of the fixed-term tenancy or are bound by it). The tenant remains bound to the fixed-term tenancy.
The RTA allows either party to terminate a tenancy on short notice where the premises become uninhabitable through no fault of either party, and provides for the rent to cease to become payable in such circumstances. However where the premises become uninhabitable due to a breach by one of the parties, the party who is not at fault must use the generic provisions of the RTA to terminate the tenancy.
Amend the RTA to—
extend the definition of ‘service tenancy’ to cover tenancies granted to both employees and self-employed contractors:
allow a tenant to give notice to end a fixed-term tenancy as if it were periodic, where a mortgagee has become entitled to terminate the fixed-term tenancy by notice:
allow a party to give short notice to end a tenancy where the premises are destroyed or so seriously damaged as to be uninhabitable due to a breach of the agreement by the other party, and where the party in breach is the landlord, allow the tenant to stop paying rent.
Security for tenants’ obligations
If wishing to hold a guarantor liable for a tenant’s obligations, a landlord must generally apply to the Disputes Tribunal (as the Tenancy Tribunal can only hear disputes between landlords and tenants). This may involve increased costs and delays (compared to the Tenancy Tribunal), and often Disputes Tribunal referees lack specialist knowledge of the RTA.
Some landlords have taken credit card imprints as security for the tenancy instead of, or in addition to, a bond. Some of these landlords have charged a purchase to the tenant’s credit card without consent.
Some landlords obtain a guarantor for a tenancy. However, the Tribunal cannot make an order against a guarantor.
Amend the RTA to—
allow the Tribunal to make an order against a guarantor, where appropriate:
prohibit landlords from requiring forms of security not authorised by the RTA.
The RTA lacks clarity with respect to rent increases, in particular—
whether rent can be increased by agreement without notice:
what wording is required in a tenancy agreement to allow rent to be increased during a fixed term, and what options a tenant may have if this happens.
Landlords are required to give at least 60 days’ notice of a rent increase. The rent increase cannot take effect within 180 days of the start of the tenancy or a previous rent increase. Landlords cannot increase rent during a fixed-term tenancy
“otherwise than as permitted by the agreement”.
Amend the RTA to—
allow rent to be increased by mutual consent in consideration of a variation to the terms of a tenancy agreement, or a substantial improvement to premises or facilities:
clarify the wording that needs to be in a tenancy agreement to enable rent to be increased during a fixed-term tenancy:
allow a tenant in a fixed-term tenancy to apply to the Tribunal for a reduction in the term of the tenancy if they have received notice of a substantial rent increase, the amount of the rent increase was unforeseen, and the increase will cause severe hardship.
Rights of entry
No right of entry exists for real estate agents to view and appraise premises before marketing them or for prospective purchasers to have premises inspected by a building inspector. This may make it difficult for a landlord to sell their premises.
Landlords may enter the premises at any time in an emergency, or with the consent of the tenant or the Tribunal. They must give at least 24 hours’ notice of entry for necessary repairs or maintenance, or 48 hours’ notice of a property inspection. To show the premises to a prospective tenant, purchaser, or a registered valuer, the landlord must obtain the consent of the tenant. This may not be unreasonably withheld, but reasonable conditions may be attached to the consent.
Amend the RTA to provide landlords with a right of entry for the purpose of having the premises appraised by a real estate agent or building inspector, subject to the same conditions as entry by a registered valuer.
Tenants can experience difficulties when landlords attempt to manage their rental properties from overseas. Particular problems include—
difficulty contacting the landlord to request repairs or give notice:
delays in repairs, final property inspections and bond refunds as some landlords wish to take care of these themselves when they next return to New Zealand:
procedural difficulties in conducting mediations and hearings and enforcing orders against overseas landlords, such as ensuring that documents are served on the landlord.
There are no provisions in the RTA requiring landlords to be in New Zealand, to appoint a New Zealand-based agent, or to provide a New Zealand address for service of documents.
Amend the RTA to require landlords who intend to be, or are, outside of New Zealand for more than 3 consecutive weeks to—
appoint a New Zealand-based agent to manage their tenancies during their absence:
advise the tenant of the agent’s appointment:
advise the Department of Building and Housing (if a bond is being held for the tenancy by the Department).
Monetary thresholds for applications to Tribunal
The RTA’s monetary thresholds have not been amended since the RTA was introduced 20 years ago. This means more—
applications meet the $3,000 threshold for legal representation, which may increase the overall cost of dispute resolution:
applicants have to choose between waiving part of their claim to bring it within the Tribunal’s $12,000 jurisdiction, or facing the increased cost and delay of pursuing their claim through the District Court.
The Tribunal has jurisdiction to hear claims up to $12,000 in value. Parties have an automatic right to use legal representation where a claim exceeds $3,000.
Amend the RTA to increase—
the Tribunal’s monetary jurisdiction from $12,000 to $50,000:
the monetary limit on the right to use legal representation from $3,000 to $6,000.
Administration of RTA and Tribunal procedure
Some of the RTA’s provisions hamper efficient and effective administration of the RTA and the provision of dispute resolution services as—
tenancy mediators do not always have the expertise to investigate and report on some matters:
parties may be too intimidated or unaware of their right to request a closed hearing:
successful applicants cannot claim their filing fee from the other party, even though they are not the party at fault:
the RTA refers to a Minister who is no longer responsible for it:
the RTA can not accommodate any change to the Minister responsible for it.
Under the RTA the—
Tribunal can require reports from tenancy mediators:
Tribunal can close hearings or prohibit publication of reports of the proceedings on the request of one of the parties:
Minister of Housing is referred to as being responsible for administering the RTA.
Amend the RTA to—
allow the Tribunal to appoint any person to investigate and compile a report on any matter of fact having a bearing on proceedings:
allow the Tribunal on its own motion to order that the whole or any part of a hearing be held in private, or to prohibit the publication of any report of proceedings:
require the Tribunal to order the other party to a dispute to compensate the applicant for their filing fee, if the applicant’s claim was upheld in full by the Tribunal, or partially upheld by the Tribunal, and in the opinion of the Tribunal it would be reasonable to make such an order:
amend references to ‘the Minister of Housing’ to refer to the Minister who is for the time being responsible for the administration of the RTA (or the relevant part).
The RTA lacks clarity with respect to—
the ownership of tenant’s fixtures where the tenant does not remove those fixtures prior to the end of the tenancy:
the validity of notices sent to an email address or post office box:
when a person is considered to be ‘residing’ in the premises.
allows tenants to remove their fixtures before the tenancy ends, but is silent on the consequences of failing to remove them:
does not provide for service of documents to an email address or a post office box:
allows landlords to include a provision in a tenancy agreement limiting the number of people that may reside in the premises.
Amend the RTA to—
clarify that ownership of a tenant’s fixtures passes to the landlord if the tenant does not remove them before the end of the tenancy, unless the landlord agreed or led the tenant to believe that the tenant could remove the fixtures at a later date:
allow parties to provide email addresses or post office boxes as an address where the party will accept service of documents relating to the tenancy:
allow a tenancy agreement to restrict the number of people that may ‘ordinarily reside’ in the premises.
Retirement Villages Act 2003
Rights for older people in retirement village rental accommodation are covered in various pieces of legislation and the common law which means that—
minimum legal rights and obligations are inadequate:
rights and obligations are not clearly defined:
information about rights and obligations is not readily accessible:
support structures are fragmented.
Rental accommodation for older people may be exempt from both the Retirement Villages Act 2003 (the RVA) and the RTA.
Supported accommodation for older people (ie rental accommodation provided with support services) is excluded from the RVA because tenants do not pay a ‘capital sum’. It is also excluded from the RTA if the cost or value of the services provided by the landlord forms more than 20% of the rent payable.
The service component of the tenancy may be subject to its own legislation. The Consumer Guarantees Act 1993 requires that services be fit for purpose, and the premises will be subject to applicable building, health, and safety requirements.
Amend the RTA to—
repeal the exemption of tenancies where the cost or value of meals or services provided to the tenant forms more than 20% of the rent:
provide landlords with a right of entry to premises, where entry is necessary to provide services to the tenant that the landlord and tenant have agreed that the landlord will provide.
Unit Titles Act 1972
Many tenants are unaware of the existence of body corporate rules until after they have committed to a tenancy, but they are bound by the rules under the Unit Titles Act 1972 (the UTA). These rules may impose additional obligations or restrictions on a tenant that are not provided for in the tenancy agreement, or may be inconsistent with a tenant’s rights under the provisions of the RTA. Changes to body corporate rules during the tenancy may reduce the tenant’s access to common facilities, such as swimming pools or services. This may affect the market rent for the tenancy or the degree to which the tenancy meets the tenant’s requirements.
The UTA states that body corporate rules apply to any person ‘in actual occupation of a unit’. There is no requirement for tenants to receive a copy of the body corporate rules, or for tenants to be consulted on, or notified of, changes to body corporate rules. Tenants have no specific rights under the RTA or the UTA if body corporate rules change to their detriment.
A recent review of the UTA has resulted in proposed legislation to repeal and replace the UTA.
Amend the RTA to—
require landlords to include body corporate rules that affect the tenant, if any, in the tenancy agreement:
require landlords to notify the tenant, in writing, of any variation to the body corporate rules that affects the tenant:
provide for a variation to the body corporate rules to automatically take effect as a variation to the terms of the tenancy agreement, once the tenant is notified of, or otherwise becomes aware of, the change:
allow the Tribunal to end a fixed-term tenancy early if the body corporate rules materially change and, in the view of the Tribunal, it would be unreasonable to require the tenant to continue with the tenancy:
allow tenants that are party to a fixed-term tenancy agreement to apply to the Tribunal for a market rent assessment within 3 months of receiving notification of, or otherwise becoming aware of, a change to body corporate rules, or the effective date of any change, whichever is the latter.
Property Law Act 2007
Since the coming into force of the Property Law Act 2007 (on 1 January 2008), Housing New Zealand Corporation is no longer able to lease privately owned residential properties under commercial contracts on the grounds that the lease is for at least 5 years.
Another provision in the RTA provides for tenancy agreements to be excluded from the RTA’s coverage when the tenancy agreement expressly provides that the tenant will not occupy the premises personally, but will sublet the premises for commercial gain or to provide accommodation for the tenant’s employees. Because Housing New Zealand Corporation usually receives substantially less than market rent for these leased properties, it would be difficult to argue that the Corporation sublets ‘for commercial gain’. However, a commercial lease is the most appropriate form of contract for the lease between the Corporation and the property owner.
Housing New Zealand Corporation utilises the ability to contract out of the RTA when they lease privately owned houses under long-term commercial contracts. The Corporation sublets these leased properties to their tenants, as social housing, under a residential tenancy agreement.
The RTA used to contain a provision allowing parties to expressly contract out of the RTA’s coverage if the tenancy was for a fixed term of at least 5 years. The Property Law Act 2007 repealed that provision.
The RTA does not cover tenancies if the tenancy agreement expressly provides that the tenant will not occupy the premises personally but will sublet the premises, either for commercial gain or to provide accommodation for the tenant’s employees.
Amend the RTA to also exclude its coverage where the tenant will not occupy the premises personally but will sublet the premises to provide social housing.
Issues arising from Residential Tenancies (Damage Insurance) Amendment Bill
Tenants, particularly those in joint tenancies, may be held liable for damage that they played no part in causing and had no way of preventing. Furthermore, tenants are often unaware that the landlord’s insurance does not limit their liability for damage, and as a result may not take steps to mitigate their liability (eg, by obtaining personal liability insurance). This may result in tenants being pursued for many thousands of dollars by insurers for careless damage. The extent to which tenants can be held liable for damage by landlords and their insurers is excessively harsh where the tenant did not cause the damage and had no way of preventing it, and where the damage was careless rather than reckless or intentional.
Under the RTA, tenants are liable for any damage which they, or their invited guests, cause intentionally or carelessly. In tenancies with more than 1 tenant, tenants usually have joint and several liability. This means tenants can be held collectively or individually liable for a breach of the tenancy agreement, regardless of which tenant committed the breach.
A tenant’s liability for damage is not affected by the fact that a landlord may have their premises insured. If an insurance company pays out a landlord for damage to the premises and believes that a tenant is liable for the damage, the insurance company may seek compensation from the tenant by way of subrogation.
The Residential Tenancies (Damage Insurance) Amendment Bill is a Member’s Bill that was introduced in March 2006. The Bill proposed to require landlords to insure their tenants against liability for damage, other than intentional damage that the tenant is ‘personally responsible’ for. The Social Services Committee recommended that the Bill not be passed, and sought an assurance that the issues addressed by the Bill would be considered as part of the review of the RTA. The Bill was subsequently withdrawn.
Amend the RTA to provide that—
the liability of the tenant(s) will be limited to 4 times the weekly rent where any tenant or tenants liable for damage to the premises can show that—
the damage was caused by a careless act or omission and not a reckless or intentional act or omission; or
none of the tenants personally caused, or failed to take reasonable steps to prevent, the damage:
where any individual tenant who is jointly and severally liable for damage to the premises can show that they did not personally cause, or fail to take reasonable steps to prevent, the damage, that tenant’s joint and several liability will be limited to 4 times the weekly rent:
no limitation of liability will apply to any individual tenant whose personal act or omission has rendered insurance money irrecoverable which would have otherwise been payable to the landlord in respect of the damage.
Although the 2001 Residential Tenancies Amendment Bill (RTAB 2001) did not progress to a second reading, there is still a need for consolidated consumer protection for boarding house tenants. Cabinet’s decisions which led to the RTAB 2001 need to be progressed under the review of the RTA. However, some of the decisions require changes in light of the Social Services Committee’s report on the RTAB 2001, submissions received on the RTAB 2001, the review of the RTA, and further analysis by officials.
some provisions specific to boarding houses relating to terminating tenancies and bonds are unjustifiably inconsistent with the RTA’s general provisions:
the definition of a boarding house as having a minimum of 4 rent paying residents would—
reduce rights for some tenants that are currently subject to the RTA’s general provisions; and
create inconsistencies with other legislation which contains requirements for boarding houses with 6 or more occupants:
the value of an abandoned item, which a boarding house landlord can dispose of without a Tribunal order, is too high and does not adequately protect a boarding house tenant’s possessions. The traditional boarding house tenant is unlikely to possess many items worth $500, and may be more at risk than other tenants of having their goods disposed of, particularly those with mental or other health problems who are occasionally hospitalised without warning.
Boarding house tenancies are usually excluded from the RTA’s coverage, as it does not apply where ‘the premises constitute part of any hotel, motel, boardinghouse or lodginghouse used for the provision of temporary or transient accommodation’.
Boarding houses tenancies are currently regulated by building and health and safety legislation, the common law, and some generic provisions of the Consumer Guarantees Act 1993.
The RTAB 2001 was introduced to extend the RTA to cover boarding house tenancies of more than 28 days. The Bill was reported back by the Social Services Committee with amendments, but never progressed to a second reading and has since been withdrawn from the Order Paper. However, Cabinet’s decisions which led to the RTAB 2001 have not been rescinded.
Progress Cabinet’s decisions which led to the RTAB 2001 in the amendment Bill that will result from the RTA’s review, with the following changes:
define a boarding house tenancy as having a minimum of 6 (rather than 4) rent paying residents; and
allow a boarding house landlord to end a tenancy immediately for both actual and threatened actions, and for all serious damage to the premises; and
allow a boarding house landlord to require up to 4 weeks’ rent as a bond (instead of 1 weeks’ rent) and require the boarding house landlord to lodge all bonds with the Department, except bonds of 1 weeks’ rent or less; and
reduce the value of a tenant’s abandoned item that can be disposed of without a Tribunal order from $500 to $100.
Statement of net benefit of proposal, including total regulatory costs (administrative, compliance and economic costs) and benefits (including non-quantifiable benefits) of proposal, and other feasible options
The costs and benefits of the proposals, to affected parties, are summarised in this section. There is insufficient information to be able to quantify the extent of the costs and benefits arising from the preferred options.
Cost associated with investigations and reports for the Tribunal are likely to increase if experts are used instead of tenancy mediators (cost likely to be small as ability to require investigations and reports is used infrequently).
Possibility of filing fee being awarded to applicant may increase the number of small or frivolous claims (mitigated by Tribunal’s ability to award costs against applicants who bring frivolous or vexatious claims).
Demand for the Department of Building and Housing tenancy services (bond processing, advice, dispute resolution) will increase due to—
extending the RTA to cover tenancies with a high service component:
giving tenants in unit titled properties new grounds to seek a Tribunal order:
requiring boarding house landlords to seek disposal orders in more cases:
allowing boarding house landlords to take higher bonds, but requiring them to be lodged:
amendments to the RTA causing a transitional increase in demand for advice and dispute resolution.
Demand for accommodation supplements from the Ministry of Social Development may increase due to higher maintenance costs being passed on to tenants.
Housing New Zealand Corporation will have to absorb more damage costs with the limiting of tenant liability for some damage to the equivalent of 4 weeks’ rent. Total cost of repairs in the 2005/06 financial year was $16.7 million, excluding fair wear and tear, and damage caused by natural disasters and third parties. Of this, $9 million was charged to tenants as recoverable damage. It is not known what proportion of this damage exceeds 4 times the weekly rent.
Demand for benefit advances from the Ministry of Social Development may increase due to allowing boarding house landlords to require up to 4 weeks’ rent as a bond (instead of 1 week as previously agreed by Cabinet).
Interest revenue earned on bond money held by the Department of Building and Housing will decrease, as bond money is paid to the Crown, and uncollected/unclaimed bonds are paid out due to advertising.
Improved health (reduced public health costs), educational outcomes, and job stability (as tenant churn reduces and housing quality improves) due to—
greater clarity and improved knowledge of rights and obligations reducing the incidence of disputes:
upgraded substandard housing in response to the introduction of sanctions for landlords who breach the requirement to comply with building requirements and health and safety regulations.
Less dependence on State-funded housing because of the potential for property investment to become more desirable/profitable due to improved legislation and a reduction in risk and disputes.
Lower demand for disputes resolution and collection services due to—
greater certainty over rights and obligations:
the increased likelihood of the ‘other party’ in a dispute settling without the need for a Tribunal application because of the possibility of being ordered to pay the applicant’s filing fee:
the ability for creditors to recover private debt collection costs associated with enforcing a Tribunal order.
Lower cost of providing dispute resolution services due to—
Improved perception of fairness in dispute resolution processes due to—
Improved perception of fairness as—
the new provisions for boarding house tenancies will be more closely aligned to the standard tenancy provisions:
tenants in supported housing will no longer have their tenancy rights affected by the services they receive:
tenants will no longer have a substantial liability for damage that they did not cause and could not have prevented:
tenants’ liability for damage caused by a careless act or omission will be limited to 4 times the weekly rent.
The Crown will be able to utilise bond money that remains unclaimed or uncollected after 6 years.
Landlords / property managers
Implications for compliance costs to business are detailed in the Business Compliance Cost Statement.
Some landlords will incur greater costs due to being explicitly prevented from splitting shared outgoings bills between tenants (can be mitigated by increasing rent or investing in meters to measure the supply of water, etc, to individual premises).
Potential loss of income for mortgagees entering into possession of premises which are the subject of a fixed-term tenancy as tenant will be able to give early notice.
Reduced ability to use legal representation, which may adversely affect outcome of proceedings for landlords (mitigated by the Tribunal’s ability to allow legal representation where necessary, adjudicators’ specialist knowledge of the RTA and the more inquisitorial nature of Tribunal proceedings).
Some landlords may have to hire a professional property manager when overseas.
Higher maintenance costs as more properties meet current building and health and safety legislative requirements.
Costs for landlords with fixed-term tenancies associated with issuing a written notice about their intent not to enter into another tenancy.
Landlords who do not insure their rental properties will have to absorb more damage costs with the limiting of tenant liability for some damage to the equivalent of 4 weeks’ rent. Officials believe that few private landlords choose not to insure their properties, but exact numbers are unknown.
Insurance premiums may increase as insurance companies’ ability to recover damage costs from tenants is restricted. Insurance companies have indicated that they generally do not take legal action against tenants, and they already charge higher premiums for rented properties, so it is expected that any impact of this kind will be small.
Landlords of unit titled properties will have reduced certainty over fixed contract terms, as tenants will be able to apply to the Tribunal to have the terms changed if the body corporate rules materially change.
Time to understand new legislation.
Reduced risk due to—
greater clarity about rights and obligations reducing the risk of unknowingly breaching the RTA:
greater certainty over the status of expiring fixed-term tenancies:
greater oversight of tenancies when overseas.
Less need for dispute resolution and collection services due to—
Lower cost dispute resolution due to—
Greater ability to effectively manage investment and business as a landlord can—
Extending the RTA to cover tenancies with a high service component will mean that these landlords will benefit from—
more clearly defined rights and obligations:
readily accessible rights and obligations due to a consolidated regulatory framework:
access to tenancy-specific support structures for advice, information and low-cost timely dispute resolution services.
Landlords’ ability to effectively manage their business will improve with the introduction of a new right of entry for the purpose of providing services to the tenant.
Boarding house landlords will be able to better mitigate any losses due to being able to require up to 4 weeks’ rent as a bond (instead of 1 week as previously agreed by Cabinet).
More consistent rental cash flow due to—
improved clarity about legislative requirements and strengthened offences/penalties resulting in fewer disputes:
improved Tribunal efficiency and effectiveness reducing dispute resolution timeframes:
improved ability to enforce Tribunal orders.
Reduced costs arising from improved compliance, enforcement and dispute resolution processes eg, travelling to mediation and reduced churn.
Greater costs for tenants where the landlord is able to shift the responsibility for outgoings to them. This can be mitigated by negotiating lower rent, conserving the use of resources such as water and transitional provisions to stop costs been transferred for existing tenancies. Of most significance to tenants renting premises with tank water.
Potential increase in rent if landlords incur maintenance costs to make properties meet current building and health and safety legislative requirements.
Greater risk for self-employed contractors to be made to vacate on short notice (it is likely that most would vacate upon expiry of contract for service anyway).
Costs for tenants in fixed-term tenancies associated with issuing a written notice about their intent not to enter into another tenancy.
Reduced ability to use legal representation which may adversely affect outcome of proceedings for tenant (mitigated by the Tribunal’s ability to allow legal representation where necessary, adjudicators’ specialist knowledge of the RTA, and the more inquisitorial nature of Tribunal proceedings).
Boarding house tenants may face greater upfront costs, as the landlord will be able to require up to 4 weeks’ rent as a bond (instead of 1 week as previously agreed by Cabinet).
If insurance premiums increase as a result of limiting tenants’ liability for some damage, this extra cost may be passed on to tenants as higher rent.
Time to understand new legislation.
Greater stability and certainty of tenure due to—
fewer disputes with landlords due to greater certainty over rights and obligations and the requirement for landlords to appoint a New Zealand-based agent when overseas:
greater emphasis on self-resolution of disputes through the use of notices to remedy:
prohibiting the use of fixed-term tenancies of 90 days or less as trial periods. (This doesn’t prohibit the use fixed-term tenancies of 90 days or less for other purposes.):
greater certainty over the status of expiring fixed-term tenancies:
the ability to end their fixed-term tenancy and take up a secure tenancy elsewhere where a mortgagee enters into possession of the premises.
Improved public health as substandard housing is upgraded due to the introduction of sanctions for landlords who breach the requirements to comply with building requirements and health and safety regulations.
Strengthened social cohesion as reduced churn means tenants/families are less transient and can stay in the same community, jobs, and schools for longer.
Strengthened ability to uphold and enforce rights due to—
landlords being prohibited from requiring forms of security not authorised by the RTA:
landlords being required to appoint a New Zealand-based agent when overseas:
prohibiting the use of fixed-term tenancies of 90 days or less as trial periods. (This doesn’t prohibit the use of fixed-term tenancies of 90 days or less for other purposes).
Financial benefits with reduced—
indirect costs for tenants associated with dispute resolution processes, eg travelling to mediation:
churn resulting in fewer relocation costs eg schools, banks, community, jobs, utility connections and improved education outcomes.
Extending the RTA to cover tenancies with a high service component will mean that these tenants will benefit from—
improved minimum legal rights:
more clearly defined rights and obligations:
readily accessible rights and obligations due to a consolidated regulatory framework:
access to tenancy-specific support structures for advice, information and low-cost timely dispute resolution services.
Tenants will be protected from substantial liability for careless damage, and for reckless or intentional damage that they did not cause and could not have prevented.
Tenants in unit titled developments will—
be made aware of the body corporate rules and any changes, which will help avoid disputes:
have greater rights when the body corporate rules materially change.
Tenants will be more likely to become aware of uncollected bond money owing to them, as the Department of Building and Housing will be able to advertise uncollected bonds.
Statement of consultation undertaken
External Stakeholder Consultation
A discussion document,
“Getting the Balance Right: Review of the Residential Tenancies Act 1986” was released in November 2004. It sought public feedback on various residential housing issues. During the public consultation period, 15 public meetings, attended by approximately 350 people, took place and 574 written submissions were received (466 of the written submissions (81%) were from private landlords).
An External Reference Group of key external stakeholders was established and was consulted at key stages during the review, including development of a public discussion document and development of proposals. The External Reference Group consisted of the following: the Retirement Commissioner, New Zealand Building Industry Federation, Reverend Lagi Sipeli, Kiwi Tamasese, Real Estate Institute of New Zealand, Property Investors’ Federation, Christchurch Tenants’ Protection Association, Local Government New Zealand, Disabled Persons Assembly, Areta Koopu, and the New Zealand Property Institute.
Government departments/agencies consulted
The following departments have been consulted on the contents of this paper: Housing New Zealand Corporation; Ministries of Justice, Economic Development, Social Development, Health, Education, Pacific Island Affairs, Youth Development, Consumer Affairs and Women’s Affairs; Treasury; Departments of Internal Affairs, Labour and Prime Minister and Cabinet, Te Puni Kokiri, Offices for Disability Issues, Senior Citizens and Ethnic Affairs.
The Retirement Commission and the Office of the Privacy Commissioner have been consulted on relevant proposals.
Business compliance cost statement
The parties that will incur compliance costs due to the review of the RTA are landlords, real estate agents, property managers, lawyers, property investment advisors, and business tenants that rent residential properties to house employees. It is not possible to estimate the size of the costs they may incur.
One-off, indirect business compliance costs will be incurred as it will take time for people to familiarise themselves with the new legislation. Some organisations, such as those involved with property management, may develop comprehensive training programmes to ensure staff become familiar with the amended Act.
Extending the RTA to cover tenancies with a high service component will mean that some landlords will incur new ongoing compliance costs as a result of being subject to the RTA when they were not previously. For example, they will have to lodge bonds, provide tenants with a written tenancy agreement, and serve notices, in accordance with the RTA.
Landlords of unit titled properties will incur ongoing compliance costs associated with disclosing relevant body corporate rules in tenancy agreements, and notifying tenants of changes to the body corporate rules as they occur.
Boarding house landlords will incur ongoing compliance costs associated with having to apply for disposal orders for abandoned goods more often.
Some landlords may incur an ongoing cost, as they have to appoint an agent to manage their tenancies when overseas. Landlords will incur a one-off cost when they send a written notice to advise a tenant in a fixed-term tenancy that they will not enter into a new tenancy agreement, that is, they want the tenant to vacate the premises upon expiry of the term.
The additional compliance costs may be offset by reduced disputes due to improved clarity of landlord and tenant obligations, resulting from the review of the RTA.